In An Alphabet Era, Google Stays True to Its Roots

Q3 earnings from Alphabet, the parent company of Google, show revenue increasing 13% year on year to hit $18.6 billion in what has been considered a highly positive set of readings.

In lieu of its financial performance by channel, Alphabet has drip fed information which can be used to piece together how the company saw another 13% rise in ad revenue since 2014.

Clicks on its paid search ads, which remain critical to Alphabet’s earnings, rose 23% compared to Q3 2014, up 6% on Q2. Meanwhile some advertisers would have been pleased to see the price of these clicks declining by 11% within the same period.

It’s in mobile where things get interesting, with Alphabet and Google CFO Ruth Porat owing part of the Q3 performance to Google’s strength in search options for smartphone and tablet owners, despite continued disclosure regarding how much this is worth.

Search holds its own

Net income for Alphabet was reported at $3.98 billion, which showed a noticeable hike on the $2.74 billion from Q3 last year.

In the hours after its earnings release for the three months to September, shares in the company rose 11% to hit a record $722.52. But if the company wants to keep reporting new highs in profit and value, it will have to satisfy the demands of its advertisers.

John McNulty, head of global marketing at Marin Software, tells PerformanceIN: “In the fight for advertiser’s wallets, Larry Page [Alphabet CEO] needs to fend off the mounting challenge from social platforms, with mobile a key battleground.

“But the company hasn’t turned its back on the core business model that it started 15 years ago. Search marketing is still an important channel for marketers and separates Google from its social rivals.”

Paid listings on Google search do still represent the majority of the company’s income from advertising. However, the rising demand for ad space on YouTube is at least relieving some of the pressure on search to deliver.

This is another area being aided by mobile users, according to Google CEO Sundar Pichai, who cited “amazing momentum” in smartphone and tablet viewing.

Pichai claims that advertisers are said to be taking note of this trend by switching some of their “traditional” spend, potentially on TV, to the group’s video-sharing service.

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Richard Towey

Richard is a former head of content at PerformanceIN. After many years spent covering developments from the automotive, sports, travel and finance sectors, he eventually turned his full attention to reporting on stories from the fast-evolving world of digital marketing.